Do you have a side hustle?
01-20-2023, 06:14 PM
#51
Gets Weekends Off
Joined APC: Nov 2016
Posts: 2,465
Originally Posted by TransWorld
There is good debt and bad debt. Credit card high interest rate debt is bad debt. Mortgages on good cash flow is good debt. Think about airlines if they did not take a loan to buy their planes. Yes, I know, logic bears no impact on your wife. But worth a shot. Then drop it, let it sink in. See if she wants to bring it up in 6 months.
01-20-2023, 07:21 PM
#52
Gets Everyday Off
Joined APC: Aug 2016
Position: Relaxed
Posts: 6,958
Originally Posted by highfarfast
I fully understand good debt and bad debt. Been having this discussion with her for 23 years.
01-20-2023, 09:11 PM
#54
Gets Weekends Off
Joined APC: Aug 2015
Position: Guppy Gear Slinger
Posts: 1,854
Originally Posted by StayFrosty
Along with two partners (non pilots) we own a medical company in a state other than the one I reside in. I’m usually at the office a few times a month for a day or two and do most of things from home via web. Because of education, my responsibilities revolve around the finance and accounting aspect of the business and I’m the de facto CFO. Also, social aspects such as golfing with providers falls into my domain. The day to day running of the business is done by a management team we hired and we receive weekly reports and meetings from them. Along with those reports we can see the status of things thru electronic software. We don’t participate in the daily operations of the business but more of a Company Board. It was heavy capital intensive to open, and for a while we second guessed things often, however now it has a significant value and something that I can replace my income with should I have a need. In the meantime it’s a source of supplemental income to allow me to position myself financially for other opportunities.
While stressful in the opening I’m very happy I’m in it now as a backup plan as well as a tangible asset for my family, especially since it has resiliency in down markets (we have no cash transactions, all insurance).
Disclaimer
Prior performance is not indicative of future results. Consult your investment and tax professional prior to taking any actions. Investment in a business is not protected from loss.
Good luck!
While stressful in the opening I’m very happy I’m in it now as a backup plan as well as a tangible asset for my family, especially since it has resiliency in down markets (we have no cash transactions, all insurance).
Disclaimer
Prior performance is not indicative of future results. Consult your investment and tax professional prior to taking any actions. Investment in a business is not protected from loss.
Good luck!
01-21-2023, 05:35 AM
#56
Gets Weekends Off
Joined APC: Apr 2017
Posts: 3,596
Originally Posted by TransWorld
Take a loan out against your free and clear house. Use as down payments for one or more rental houses. Make sure your cash flow, interest rates, taxes, depreciation, property management fees, maintenance, empty rental percentage, etc. works. Likely could fund 3 more houses, own 4, total, at 25% down with a 75% mortgage.
01-21-2023, 06:00 AM
#57
Gets Weekends Off
Joined APC: Sep 2016
Posts: 6,716
Originally Posted by SonicFlyer
This is VERY high risk and could cause you to at best go bankrupt and at worst lose your primary residence. Some people are successful at it, others are not. Even if you do everything right using this method, environmental and market conditions beyond your control can absolutely screw you. I would recommend never financing your personal residence and ideally pay for the first rental in cash or 80% in cash. Yeah the numbers don't look as good like that but you're also much lower risk and not building a house of cards..... Remember rental and housing prices can decline sometimes.
01-21-2023, 06:38 AM
#58
Gets Weekends Off
Joined APC: Jun 2022
Posts: 1,272
Originally Posted by highfarfast
It’s something I’ve thought about. And honestly, it was the original plan all along except my wife didn’t want to finance and I haven’t been able to talk her into it (she is NOT a money person, just knows debt is bad). That said, we are VERY close to being completely debt free for the first time in our adult lives and it’s making me not want to finance anything else either. At the rate we’re going, we can probably have 10 or so rental units when I retire, free of debt, in addition to 401K and IRA savings. And that’s without financing.
But yeah, my original plan was to finance against the rental to purchase more rentals and thought about it enough to have a plan in place to do it. Just haven’t been able to convince the other half.
But yeah, my original plan was to finance against the rental to purchase more rentals and thought about it enough to have a plan in place to do it. Just haven’t been able to convince the other half.
Areas I’m looking at now, are south/west salt lake. St. George, Boise suburbs. Lots of movement from the coast as big money comes in and pushes people east. This works for me. On average I am pocketing about 2.5% property value in cash, +equity in rising value after all overhead.
You can’t do this in areas that have already popped. Find an area that is 3-5 blocks from the “nice part” and watch what happens in 2-3 years.
I roll with 30% down, but I think off the top of my head 25% is the minimum for an investment property.
This is all dependent on finding a place of growth
obviously.
The reason why I like property so much is this.
1) it is a real asset that exists on earth.
2) barring a natural disaster or economic disaster locally, the value does not go down
3) I buy middle level units. Somewhere in the realm of 2k per month atm. I target working professionals in their late 20s and early 30s. They pay their rent on time. Also, when times are good lower income folks want to move in, when times are bad higher income folks downsize and want to move in. I’m never short of applicants.
If anyone is actively thinking about doing this stuff, don’t skimp on mx costs when building your numbers. I would account for 20% mx costs until you actually get a year or 2 under your belt and get a feel for a property. Some are lemons just like cars lol
Last edited by Hubcapped; 01-21-2023 at 06:50 AM.
01-21-2023, 07:45 AM
#59
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,311
Originally Posted by highfarfast
It’s something I’ve thought about. And honestly, it was the original plan all along except my wife didn’t want to finance and I haven’t been able to talk her into it (she is NOT a money person, just knows debt is bad). That said, we are VERY close to being completely debt free for the first time in our adult lives and it’s making me not want to finance anything else either. At the rate we’re going, we can probably have 10 or so rental units when I retire, free of debt, in addition to 401K and IRA savings. And that’s without financing.
But yeah, my original plan was to finance against the rental to purchase more rentals and thought about it enough to have a plan in place to do it. Just haven’t been able to convince the other half.
But yeah, my original plan was to finance against the rental to purchase more rentals and thought about it enough to have a plan in place to do it. Just haven’t been able to convince the other half.
01-21-2023, 08:06 AM
#60
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,311
Originally Posted by TransWorld
There is good debt and bad debt. Credit card high interest rate debt is bad debt. Mortgages on good cash flow is good debt. Think about airlines if they did not take a loan to buy their planes. Yes, I know, logic bears no impact on your wife. But worth a shot. Then drop it, let it sink in. See if she wants to bring it up in 6 months.
Yeah I got a couple refis (before the rates jumped) which are real close to 2%... no way in hell am I paying that off early, that's (almost) free money.
Many wealthy folks have lots of debt, that frees up their money for other purposes: living the high life, generating more wealth. Don't get too caught up in the middle-class attitude that less debt is somehow virtuous... we don't live in a system that necessarily rewards that. You do of course have to balance debt with your personal risk tolerance, but too little risk tolerance isn't a very practical outlook either... life is inherently risky, and nobody gets out alive anyway.
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